BlogA promise or a compromise? Assessing what the Liberal Party platform means for Ontario

A promise or a compromise? Assessing what the Liberal Party platform means for Ontario

October 21, 2015

Justin Trudeau, leader of the Liberal Party of Canada and underdog in the federal election campaign, has won a majority government.

Most recognize that the 2015 election was a unique snapshot in Canada’s political history. Not only did candidates undergo (and survive!) one of the longest campaigns on record, but this was also one of the most costly and, arguably, nastiest experiments on Canada’s democratic experiment.

As analysts reflect on the winning strategies and the slew of “thank you” speeches come to a close, it’s time for elected officials to act upon their promises. Perhaps easier said than done, it is worth assessing whether leaders will hold true to their promises or whether they will have to compromise their agenda. Under the backdrop of changing political realities, an uncertain economic environment, and growing citizen expectations, we now turn our attention to how elected officials will turn their promises into a reality.

The Institute analyzed the platform put forth by the Liberal Party of Canada to see what it means for Ontario.[1] To narrow the scope, the Institute looked at key initiatives proposed for four key policy files: health care, education and skills training, infrastructure, and supports for small businesses. Thinking about how these campaign promises relate to major policies in Ontario is important – these files represent major proportions of public spending and are key to enhancing Ontario’s economic competitiveness and prosperity.

Honing in on health care

In 2013-14, the government of Ontario spent $48.9 billion (42.2 percent of the total budget) on health care.[2] The Liberal Party platform focuses on revisiting intergovernmental transfer payments as well as increasing funding for home care and children’s health. How do these initiatives fit with existing policies in Ontario?

The Institute strongly encourages the federal government to work alongside its provincial counterparts to ensure that resources directed toward Ontario’s health care system and initiatives are streamlined, effective, and efficient. Notably absent from the Liberal’s platform is a federally-led pharmacare program. As suggested in Working Paper 20, a national pharmacare program could enhance administrative efficiency, purchasing power, and harmonize access to drugs across provinces.[3]The Institute hopes to see this type of initiative adopted by the federal government in the near future.

Enhancing education and skills training

The government of Ontario spent 26.9 percent of its 2013-14 budget (or $31.2 billion) on the education and skills training sectors.[4] According to their platform, the Liberals are looking to invest in postsecondary education as well as promote the skilled trades and apprenticeship. How will these promises impact Ontario’s existing initiatives?

The Institute stresses the importance of evidence-based and coordinated education and skills training policies for Ontario. In particular, policies implemented by the federal government should take into consideration existing provincial initiatives as well as ensure that resources are managed effectively and efficiently. The Institute has previously recommended adopting innovation in school curriculum and enhancing teachers’ mandatory qualifications.[5] It will be interesting to see if a national effort to address these issues will be furthered by the newly elected federal government.

Investing in infrastructure

About 10.2 percent of Ontario’s 2013-14 budget ($11.8 billion) was dedicated toward infrastructure investments, with the majority of resources directed toward transportation and transit.[6] Further, the 2015 Ontario Budget commits more than $130 billion in infrastructure over the next 10 years – the largest infrastructure investment in the province’s history.[7] The Liberal Party platform proposes investing in three types of infrastructure projects (public transit, social, and green) to boost economic development, reduce air pollution, shorten commute times, and strengthen communities. How do these compare to Ontario’s planned investments?

Investing in productivity-enhancing infrastructure assets is crucial to support Ontario’s economic competitiveness and prosperity. In Working Paper 22, the Institute recommended prioritizing infrastructure projects according to their returns on labour productivity. Our analysis revealed that marine engineering as well as health care and social assistance yield the greatest returns to labour productivity in Canada.[8] In addition to making strategic investments, the Institute also recommended streamlining project selection, implementing user fees, and facilitating private investment. The Institute hopes that these findings will be taken into consideration as the federal and provincial governments develop and execute their infrastructure plans.

Supporting small business

In recognition of the role small businesses play in the economy, both the federal and provincial governments offer supports designed to encourage small business growth. Many of these programs enhance the financial resources available to business owners, principally through the tax code. The small business deduction is one of these policies and provides preferential tax treatment for businesses reporting less than $500,000 in annual earnings before tax. Offered by both levels of government, what do changes in the small business deduction mean for Ontario?

In Working Paper 21, the Institute found that Ontario, compared to its peers, has the largest tax rate differential between small and large firms. Importantly, since the small business deduction is conditional on remaining small, it is seen as a political tool that discourages business growth.[10] Accordingly, the Institute has proposed either a flat corporate tax rate or a progressive tax scheme as alternative tax arrangements to support business growth.[11] When it comes to the federal government’s election promise on the small business deduction, the Institute is looking for a compromise.

Lights, camera, action!

The spotlight is on the federal government to accomplish its political agenda, and time will tell whether the Liberal Party will make true on its promises or settle with a compromise. Health care, education and skills training, along with supports for infrastructure and small businesses, are crucial files where Ontarians – and Canadians – can benefit from evidence-based and coordinated policy-making. Despite a majority government, the political thrill ride is not over and we have yet to see what “real change” looks like. Stay tuned!

[5] Task Force on Competitiveness, Productivity, and Economic Progress. Thirteenth Annual Report, “Finding its own way: Ontario needs to take a new tack. The Institute for Competitiveness & Prosperity. (2014).